So much fuss about a simple issue over call charges.!!!
Well we all are aware of the so many things happening in telecom space. First Bharti lost MTN deal and then Tata Docomo came up with one super cheap scheme and then TRAI trying to make a pay per second a mandatory stuff in every service provider's portfolio. But is there any scope for this price war in already ultra low tariff scenario? If we go with Mr. Mittal then there is no such scope left because according to him the deal should have some economic viability and also it should not be a shocker to the customer. I might not know the nitty-gritties of the telecom sector but I know that telecom has become an essential commodity in our lives and this part cannot be ruled out for decades to come, may be the format of services change but not the need for the service.
If I call this a commoditization of telecom sector then I think I'm not wrong (there may be chances that I'm wrong though). And that's also true that in a commodity type business where profit margins are low then scale play its role. And scale can only be built if SP's can provided better customer support system and also better options for customers.
Our fund had invested on Bharti Airtel in the hey days of October 2008 and it’s constitute 9% of our portfolio. Although it was way beyond Buffet style of investing, but being a technical guy I can understand the difference in the services of different SP's and also the price/value scenario was in our favor at that time. I put that as a bond equity kind of investment where I was suppose to get 25% annual return. My time line if infinite till Airtel is giving me an earning with a coupon of around 5-8% . The whole idea was on the basis that Bharti is still the market leader and it’s like a shark ready to eat others. One good strategy about Airtel is Grow consolidate and then back to the Growth cycle and the spiral continues . Check this out:--
1) Bharti Airtel has 24.3% customer market share and 33.8% revenue market share.
2) Vodafone India has 18.8% customer market share and 20.7% revenue market share.
3) Idea Cellular has 11.2% subscribers market share and 12.1% revenue market share
4) BSNL has subscriber share of 12.7% and mere 10.2% of revenue share
5) Reliance Communications is the worst performer with 18.9% customer market share and pathetic 11.5% revenue market share.
Well we all are aware of the so many things happening in telecom space. First Bharti lost MTN deal and then Tata Docomo came up with one super cheap scheme and then TRAI trying to make a pay per second a mandatory stuff in every service provider's portfolio. But is there any scope for this price war in already ultra low tariff scenario? If we go with Mr. Mittal then there is no such scope left because according to him the deal should have some economic viability and also it should not be a shocker to the customer. I might not know the nitty-gritties of the telecom sector but I know that telecom has become an essential commodity in our lives and this part cannot be ruled out for decades to come, may be the format of services change but not the need for the service.
If I call this a commoditization of telecom sector then I think I'm not wrong (there may be chances that I'm wrong though). And that's also true that in a commodity type business where profit margins are low then scale play its role. And scale can only be built if SP's can provided better customer support system and also better options for customers.
Our fund had invested on Bharti Airtel in the hey days of October 2008 and it’s constitute 9% of our portfolio. Although it was way beyond Buffet style of investing, but being a technical guy I can understand the difference in the services of different SP's and also the price/value scenario was in our favor at that time. I put that as a bond equity kind of investment where I was suppose to get 25% annual return. My time line if infinite till Airtel is giving me an earning with a coupon of around 5-8% . The whole idea was on the basis that Bharti is still the market leader and it’s like a shark ready to eat others. One good strategy about Airtel is Grow consolidate and then back to the Growth cycle and the spiral continues . Check this out:--
1) Bharti Airtel has 24.3% customer market share and 33.8% revenue market share.
2) Vodafone India has 18.8% customer market share and 20.7% revenue market share.
3) Idea Cellular has 11.2% subscribers market share and 12.1% revenue market share
4) BSNL has subscriber share of 12.7% and mere 10.2% of revenue share
5) Reliance Communications is the worst performer with 18.9% customer market share and pathetic 11.5% revenue market share.
Now if you prefer scuttle butt approach then ask any airtel mobil/broadband customer/employee and customers/employees of other SP’s.All have one fear factor and that is “AIRTEL”. This is one part and enough for an auspicious start.Moreover PM of Bharti is greater than anyother SP , the same is true with average ROE. Also Bharti is sitting on a solid cash base and has stable cash flow.
Second, It’s kind of physiological that once you subscribe to a service provider you are least likely to change that until unless service deteriorates which is not with airtel, because my family members and colleagues are satisfied with the hassle free service, although there may be many dissatisfied customers also, satisfaction outnumbers dissatisfaction.
Mr. Sanjay Kapoor President, Mobile Services at Bharti Airtel said,
We will not have a knee jerk reaction. No free minutes models are sustainable. Reliance will eventually withdraw after sometime. Airtel will remain competitive with excellent QoS. Since Reliance GSM launch in the past few weeks, we have not seen any impact nor there is any such caution to be noticed.
And I think he is right , because in the only economic viable model will survive and these short term subscriber oriented schemes will be outdated by better services and support.
Warren Buffet said:-
“If you don’t know jewelry, know the jeweler.”
And I think Mr. Mittal and Mr. Kohli are better jewelers in Telecom space. So I’m not going to sell Airtel that easily!!!!!
Saludos,
Ashutosh
Second, It’s kind of physiological that once you subscribe to a service provider you are least likely to change that until unless service deteriorates which is not with airtel, because my family members and colleagues are satisfied with the hassle free service, although there may be many dissatisfied customers also, satisfaction outnumbers dissatisfaction.
Mr. Sanjay Kapoor President, Mobile Services at Bharti Airtel said,
We will not have a knee jerk reaction. No free minutes models are sustainable. Reliance will eventually withdraw after sometime. Airtel will remain competitive with excellent QoS. Since Reliance GSM launch in the past few weeks, we have not seen any impact nor there is any such caution to be noticed.
And I think he is right , because in the only economic viable model will survive and these short term subscriber oriented schemes will be outdated by better services and support.
Warren Buffet said:-
“If you don’t know jewelry, know the jeweler.”
And I think Mr. Mittal and Mr. Kohli are better jewelers in Telecom space. So I’m not going to sell Airtel that easily!!!!!
Saludos,
Ashutosh
